Question

Flyer Company has provided the following information prior to any year-end bad debt adjustment: Cash sales, $169,000 Credit sales, $469,000 Selling and administrative expenses, $129,000 Sales returns and allowances, $49,000 Gross profit, $509,000 Accounts receivable, $295,000 Sales discounts, $33,000 Allowance for doubtful accounts credit balance, $3,100 Flyer estimates bad debt expense assuming that 2.5% of credit sales have historically been uncollectible. What is the balance in the allowance for doubtful accounts after bad debt expense is recorded

Answer 1

Step-by-step explanation:

Solution

Given that:

Flyer company provided the following information stated below:

Cash sales = $169,000

Thew Selling and administrative expenses = $129,000

Sales returns and allowances, =$49,000

Gross profit,=$509,000

Accounts receivable= $295,000

Sales discounts =$33,000

Allowance for doubtful accounts credit balance =$3,100

Now,

we find the balance in the allowance of the doubtful accounts

Thus,

Flyer company debt expense = 2.5%

The sales in credit is = $469,000

Thus,

We calculate both the bad debt expense for Flyer's company and it's credit sales of

which gives us this,

Flyers debt expense that is bad = 2.5% * $469,000

= $11.25